L&T launches strategic unit L&T-Nxt to focus on AI, Internet of Things

Construction to engineering major Larsen & Toubro (L&T) has announced a five-year strategic initiative — L&T-Nxt — that will focus on artificial intelligence (AI), Internet of Things (IoT), virtual reality (VR), augmented reality (AR), geo‐spatial enterprises, and cyber security.
 
The announcement comes at a time when L&T is trying to expand its technology footprint through a sweet and sour takeover of Mindtree.
 
“Disruption has become the new order as we embrace frontier technologies, and our businesses are leapfrogging into entirely new realms powered by the tremendous benefits of digitalisation and analytics,” said S N Subrahmanyan, chief executive officer and managing director, L&T, referring to the efforts of the company to embrace digitalisation.

 

L&T, through its current construction, EPC (engineering, procurement, construction) and manufacturing businesses, has made one of the largest deployments of IoT, analytics and AI in the industrial sector in areas such as finance, human resources, labour, and plant material among others. The company is shifting its focus to accelerating top line and bottom line growth while at the same time expanding its potential for value creation by adopting a fresh mindset and building a new structure from the ground up.
 
L&T-Nxt will at present be driven by J D Patil, a senior executive vice-president (defence business) and member of the board. “L&T-Nxt has been honed and utilised in-house for over three years now and we felt that it was a good time to take this capacity to our customers across the industries,” he said.

 
Patil said there would be little overlap between the kind of services catered by L&T-Nxt with that of the group’s existing software and technology arms, L&T Infotech (LTI) and L&T Technology Services (LTTS). He did not foresee any immediate plans to list the entity.
 
The idea, he said, was to provide existing and new engineering customers higher efficiency and digital-led value addition to services. The L&T-Nxt team currently comprises a few hundred employees and will grow further as the business vertical develops. “We see new technology businesses and sunrise enterprises as prime constituents with the latent upside for rapid and substantial value creation.”

 
Both LTI and LTTS are among the better favoured technology providers in the mid-cap IT space. Analysts are not entirely sure how L&T group’s technology ambition is intended to pan out if they seek to keep these two companies (which also address a number of group clients) separate from this new initiative. Last week, Subrahmanyan had said even if Mindtree didn’t come into the its fold, the group wouldn’t have any immediate plans of consolidation among its IT companies.
 
After acquiring 20.3 per cent from Mindtree’s key shareholder V G Siddhartha, L&T on Tuesday said its open offer for Mindtree would open in May. L&T will spend an additional Rs 5,030 crore in the open offer to acquire another 31 per cent from Mindtree’s shareholders to take majority control in the company. It plans to buy 15 per cent additional shares from the market at the same price.

L&T-NXT: Getting future-ready
 
 

•  L&T-Nxt will focus on artificial intelligence, internet of things, virtual reality, augmented reality, geo-spatial enterprises, and cyber security
• L&T-Nxt’s  team comprises a few hundred employees
• There would be little overlap between the kind of services catered by L&T Infotech and L&T Technology Services
• The idea is to provide customers higher efficiency and digital-led value addition to services